The Principles of Merged Mining

What is merged mining

If a miner plans to start the process of merged mining, it means that he/she wants to be able to mine 2 cryptocurrencies at one and the same time. Of course, there is only one algorithm used.

This process allows to increase the hashing power of not so popular cryptocurrencies. It happens due to the fact that a miner usually chooses to earn one very popular cryptocurrency and one not so popular cryptocurrency.

As a rule, merged mining is popular in case it comes down to the following pairs of cryptocurrencies: Litecoin & Dogecoin and Namecoin & Bitcoin (with SHA-256).

The process of mining is quite complicated. The transactions you carry out in both of the networks follow a certain order. As for the blockchains themselves, they’re classified as the parent and the auxiliary blockchain respectively. The merkle root of the auxiliary blockchain is inserted into the extra nonce section of the parent blockchain.

Due to the fact that the information concerning the set of hashes of one of the blockchains is incorporated into a superfluous part of the other blockchain, there is a special rule in terms of when the Proof of Work is achieved. In particular, it’s achieved in case a miner performs a solution with a specific difficulty.

If you’re up to mining Bitcoin & Namecoin, remember that the process of mining the 2nd cryptocurrency is characterized by a lower level of difficulty. The crux of the matter is that there is less network power. Consequently, in its hash there are less zeroes. There is only one problem to pay attention to. If it so happens that quite a large pool in the Bitcoin network is switched to mining 2 cryptocurrencies at one and the same time, it can significantly reduce the Namecoin hashing power.

All in all, there are 3 scenarios that can happen. They are as follows:

  • Being a miner who prefers merge mining, you find a solution that implies a too low difficulty. Consequently, it’s impossible to provide valid hash and Proof of Work for both of the blockchains. If such a situation occurs, there is nothing to worry about. You’ll simply have to insert a new nonce value and rehash.
  • Being a miner who prefers merge mining, you find a solution that allows you to get the Proof of Work for the auxiliary blockchain only. If you’re mining Namecoin & Bitcoin, it means that you found an appropriate solution for Namecoin. You’ll be using the solution for this blockchain only.
  • Being a miner who prefers merge mining, you find a solution that allows you to provide all the necessary confirmations for both of the blockchains. For you it means that you found a solution that’s good for both of the blockchains you’re mining in. Consequently, you’ll get a “double” reward. You’ll get both Bitcoins & Namecoins or Dogecoins & Litecoins.

The principles of merged mining

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